![]() A few early government-backed projects were never finished after billions of dollars of investments and delays. But some industry groups have backed an alternative standard, which critics fear could be less stringent.Ĭarbon capture technology has long struggled to gain traction. to use the Environmental Protection Agency’s existing monitoring rules for underground storage. Environmental groups, for instance, have urged the I.R.S. The I.R.S., already strained by years of budget cuts, faces technical challenges in writing carbon capture rules. delay matters, given that the agency hasn’t explained how these financial partnerships can be structured, what steps companies must take to ensure that the underground carbon dioxide doesn’t leak out, and what the penalties might be if leaks do occur. Instead, many will need to partner with banks or investors with large tax burdens - much as wind and solar developers have done with their own federal tax credits. ![]() That’s a bigger tax break than most developers can use on their own. To qualify, a power plant must capture at least 500,000 tons of carbon dioxide per year, which means the credit could be worth more than $200 million over its 12-year lifetime. ![]() The tax credit is worth up to $50 for each ton of carbon dioxide captured and permanently buried underground, and up to $35 per ton if the captured gas is used for activities like enhanced oil recovery. Republican supporters, along with coal and oil companies, saw carbon capture as a less disruptive way to reduce emissions than abandoning fossil fuels altogether.Īnd while many environmentalists recoiled from a policy that would aid oil extraction, some green groups said that oil industry support could help drive down the cost of carbon capture faster. delay is striking because the tax credit was one of the few climate policies to attract bipartisan support.ĭemocratic backers said that carbon capture could prove necessary to cut climate change pollution from industrial sources like cement or steel plants that are otherwise hard to clean up. But the company says that emissions from that oil would be at least partly offset by the injected carbon dioxide that remained underground - creating a fuel that has a smaller climate impact than conventional oil. This practice, known as enhanced oil recovery, would produce more fossil fuels. In Texas, Occidental Petroleum is looking to capture carbon dioxide from two ethanol plants and inject the gas into its underground wells to help extract oil. The uncertainty created by the delay, many fear, may prevent projects from getting off the ground. By law, companies have to start construction by the end of 2023 to qualify for the credit, but planning and financing large projects can take years. has also been busy implementing the vast 2017 Republican tax overhaul, which may partly explain the delay.īut the clock is ticking on its tax credit. As to why the rules have taken two years, he said the agency has been working through “many challenging issues” raised by companies, environmental groups and other interested parties. That includes rules for monitoring underground storage sites and imposing penalties if the carbon dioxide leaks back out. But other important guidance is still “under development,” the I.R.S. spokesman said Thursday that the agency would begin issuing some guidance “within the next few weeks,” including clarity on how project developers can partner with investors. “The delay is unacceptable and will only further slow much-needed investment in carbon capture,” said Senator John Barrasso, Republican of Wyoming and an original co-sponsor of the tax break.Īsked about the delay, an I.R.S. ![]() But two years later, those plans remain blocked because the Internal Revenue Service has yet to explain how, exactly, companies can claim the tax credit that would make the projects viable. House Republicans are aiming to expand support for carbon capture as part of a broader package of climate bills, the first of which is expected Wednesday.Īt least a dozen carbon capture projects, potentially representing billions of dollars in investments, have been announced since Congress passed its 2018 tax break. The technology is still costly and contentious, but may one day become a valuable tool for slowing global warming. In 2018, Congress approved a lucrative tax break for companies that use carbon capture technology to trap carbon dioxide produced by industrial sites before the gas escapes into the atmosphere and heats the planet. WASHINGTON - A rare policy enacted under President Trump to address climate change has run into an unexpected hurdle: the tax man. ![]()
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